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/raid1/www/Hosts/bankrupt/TCREUR_Public/020606.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, June 06, 2002, Vol. 3, No. 111 Headlines * F R A N C E * ALCATEL: Still Owed EUR100 Million by Insolvent KPNQwest FRANCE TELECOM: Plans for Wind Stake May be Modified, Says Chair * G E R M A N Y * BANKGESELLSCHAFT BERLIN: Four Bidders Allowed Peek at Finances DEUTSCHE TELEKOM: Regulator Sets Fine for Lease Application Delay FAIRCHILD DORNIER: Bombardier Allegedly Interested in 728 Project HERLITZ AG: Begins Insolvency Proceedings in Berlin KIRCHPAYTV GMBH: Bankruptcy No Longer an Option for Premiere SACHSENRING AG: No State Aid for Now as Firm Doesn't Need Any * I R E L A N D * AER LINGUS: Resumes Operations a Day Earlier as Pilots Relent * I T A L Y * ALITALIA SPA: Corporate Headquarters Could Raise US$ 200MM * N E T H E R L A N D S * KPNQWEST NV: Swedish Operations Follow Parent to Bankruptcy KPN NV: Finalizes Sale of Network Builder to Koninklijke Volker KPNQWEST NV: Could Be De-listed From Euronext Today LAURUS NV: Signing Second Tranche of Funding Agreements * P O L A N D * ELEKTRIM SA: BRE Bank Announces EUR 100MM Restructured Bond-buy ELEKTRIM SA: Announces Shareholders' Meeting Schedule, Agenda ELEKTRIM SA: Initial Deal With Bondholders and BRE Bank S.A. * S P A I N * CAMPOFRIO ALIMENTACION: Backpedals on Latin American Investments * S W E D E N * LM ERICSSON: Provides Fiber Optics Network Equipment to KPN LM ERICSSON: To Test UMTS Network in Dallas With AT&T Wireless LM ERICSSON: Chief Discredits Forecasts of Market Recovery in '02 * U N I T E D K I N G D O M * ASTON GROUP: Winds up Livingston Office in Scotland BRITISH TELECOM: Wants New Directory Business After Selling Yell ELKSTONE HOLDINGS: PwC Offer Manufacturing Company for Sale ENERGIS PLC: Eurostar Renews Networking Contract ESPORTA: Has Been Padding Revenues for Years, Says Paper PRESCOT ALUMINIUM: Administrators Offer Cable Business for Sale TELESENSKSCL: Jobs in Scotland at Risk as Parent Runs Out of Cash TELEWEST COMMUNICATIONS: Admits to Receipt of Letter From Lawyers =========== F R A N C E =========== ALCATEL: Still Owed EUR100 Million by Insolvent KPNQwest -------------------------------------------------------- Analysts believe French telecom equipment maker Alcatel will be forced to take provisions in the second quarter for a EUR100 million outstanding obligation by KPNQwest, which filed for bankruptcy last Friday. A spokesman for the company did not clarify what these dues are for. He only told Les Echos that the firm is in talks with the Dutch data carrier about the obligation. Shares in Alcatel were down 1.65% at 12.49 euros on Monday, under-performing the DJ Stoxx telecoms index, which was down 0.3 percent at the time. The company's debt ratings were recently placed under review by ratings agency due to the depressed state of the telecom sector. FRANCE TELECOM: Plans for Wind Stake May be Modified, Says Chair ---------------------------------------------------------------- The planned sale of France Telecom's 26.6% stake in Italian telecom operator Wind may yet be changed as a result of the management shakeup at Enel, the majority owner. The company had earlier planned to float the stake, which at that time was valued EUR15 billion, but early this week Chairman Michel Bon hinted that things could still change. "The new management have not yet called me to discuss strategy, but if they decide to change their strategy then maybe things could be different," Mr. Bon told the Financial Times in an interview. A France Telecom spokesman, however, said that the company was still looking to sell the stake, but the method could depend on discussions with Enel's new management. The Italian utility is now headed by Paolo Scaroni who was recently appointed by the Italian government as chief executive. Piero Gnudi heads the board as its new chairman. Some speculate that if Wind were now broken up into its fixed and mobile arms, France Telecom could seek to swap its holding for a larger stake in the mobile business. Before deciding to sell the stake in March, the French group had planned to construct a pan- European footprint for Orange, its mobile phone unit, by leveraging minority stakes in operators in Italy and Germany. But Orange failed to re-brand Wind and subsequently opposed its merger with Infostrada to create the largest fixed-line competitor to Telecom Italia, says the paper. Wind is currently the third-largest operator in Italy. Analysts interviewed by the Financial Times think that any move less than the sale of the Wind stake would cast a doubt on the company's plan to trim debts. This, because its debt-reduction plan is primarily hinged on asset sales and cash generation. The company had recently ruled out a rights issue as another way of cutting debts because of the depressed price of its shares. ============= G E R M A N Y ============= BANKGESELLSCHAFT BERLIN: Four Bidders Allowed Peek at Finances -------------------------------------------------------------- The privatization of Bankgesellschaft Berlin, which is 81%- controlled by the city-state of Berlin, is now moving full-swing with the admission Monday of four bidders into the banks so- called "data room," says the Financial Times. Finance Senator Thilo Sarrazin, who is leading the auction, did not confirm the identity of the four bidders, though it has been known that a consortium of German banks, led by savings bank association and Norddeutsche Landesbank, are among the bidders. The other bidders, according to some accounts, include WL Ross, a U.S. private equity specialist; and an alliance of Christopher Flowers and Texas Pacific Group, two formerly competing parties. The paper says Lone Star Fund, a Dallas-based private equity group that has property holdings in eastern Germany, is also involved. Mr. Sarrazin says the prospective buyers have four weeks to assess detailed information about the bank's health. He is confident the city government will receive at least one indicative offer before the end of July. This, in spite concerns about the bank's financial condition and political resistance to a sale. The paper says this privatization is the most expensive and politically charged sale in years. Last year, the city-state injected EUR1.75 billion (US$1.6 billion) in fresh capital to keep the bank from collapsing under the weight of controversial property loans and real estate investments. Schroder Salomon Smith Barney is advising the government on the sale. Mr. Sarrazin is hopeful that negotiations could be concluded in the autumn, with a view to closing the deal by early next year, says the paper. Meanwhile, according to Financial Times Deutschland, Mr. Sarrazin does not discount the breakup of the banking group, which controls Landesbank Berlin and the savings bank Berliner Sparkasse, once the sale is completed. He, however, says the retail banking activities of Bankgesellschaft must continue in the city. DEUTSCHE TELEKOM: Regulator Sets Fine for Lease Application Delay ----------------------------------------------------------------- Debt-strapped former monopoly Deutsche Telekom faces fines of 5% the monthly fixed-line rent for each day it misses the deadline for opening its network to competitors, says Total Telecom. German telecom regulator RegTP set the penalty structure Monday, which drew varied reactions from industry players. Telecoms regulator Matthias Kurth said the measure should be taken as a "contractual incentive" so that the telecom giant would stick to delivery dates. Competitors have long complained that Deutsche Telekom is deliberately delaying the approval of their applications to lease lines. The company owns most of the German telecom infrastructure. The industry paper says the fines apply only to dedicated phone or data lines between telecoms operators, so-called carrier leased lines, or lines between an operator and corporate clients. Lines to private homes are not covered. A typical leased line that carries the equivalent of 32 ISDN lines costs about 1,000 euros (US$932) a month, Mr. Kurth told Total Telecom. This means that each delay will cost the telecom giant 50 euros. Deadlines depend on the size of the line and run from 12 days to six months. There is no cap on the penalty, says the paper. Although the association of alternative telecom carriers welcomes the decision, they nevertheless called the fines moderate, the report says. A Deutsche Telekom spokesman, on the other hand, said the company did not understand the regulator's decision and might contest it in court. FAIRCHILD DORNIER: Bombardier Allegedly Interested in 728 Project ----------------------------------------------------------------- Signs of a possible takeover by Bombardier are becoming clearer, said Handelsblatt early this week, after interviewing sources privy to the situation at the insolvent German firm. According to the German daily, a 20-person team sent by Bombardier to examine the 728JET project of Fairchild Dornier is already done with its technical evaluation and the results are allegedly positive. Sources told Handelsblatt that suppliers of Fairchild had already been informed to continue operations because the plane-maker's site in the Bavarian town of Oberpfaffenhofen will continue work on the 70 to 100-seater plane project. This signals that Bombardier may be close to taking over the company, says the report. Bombardier is the only company doing due diligence on the 728 flagship project. A rescue by Bombardier will save 3,600 jobs in the Oberpfaffenhofen complex and 12,000 more at a series of suppliers who depend on the site for their livelihood. Among the plane- maker's suppliers who are bound to lose significantly in the event of a Fairchild collapse are MAN Technologie, Liebherr and Diehl Avionik, says Handelsblatt. But some industry observers still believe that a Bombardier rescue is not yet a sure deal. They base their apprehension on Bombardier's reputation as a tough negotiating partner. It will likely demand for clear financing commitments from the government before it agrees to take over Fairchild's project, they told Handelsblatt. "Bombardier will very coldly decide whether production will pay off at the site," said one industry insider. A deal with Bombardier is not expected until the start of formal insolvency proceedings, which is expected to take place on July 1, says the paper. To acquire individual parts of the group will be simpler in the context of insolvency, say some Fairchild suppliers. As this develops, it is inevitable that Fairchild will be broken up. Bombardier has shown no interest in other parts of the group -- production of its smaller 328 regional jet or its assembly work for the pan-European Airbus consortium, says the paper. Insolvency administrator Eberhard Braun, however, claims that there are other firms seriously interested in other parts of the business. He said all activities would be kept at Oberpfaffenhofen, which will be turned into an industrial park backed by a number of different investors. HERLITZ AG: Begins Insolvency Proceedings in Berlin --------------------------------------------------- Insolvency proceedings begin for Herlitz AG and the Herlitz PBS AG at the district court Charlottenburg after filing an insolvency petition about two months ago. Peter Leonhardt was appointed the insolvency administrator. Herlitz AG, supplier of stationery and paper products, will realize a restructuring aimed at continuing its PBS business as a going concern. The Herlitz FOP in the brandenburgischen Peitz, which employs approximately 750 workers, together with a Czech subsidiary, is saved from the insolvency of Herlitz AG. Since the banks granted a credit of over EUR 15 million, Herlitz AG announces its unit will continue operations and serve customers, the group announced in April. KIRCHPAYTV GMBH: Bankruptcy No Longer an Option for Premiere ------------------------------------------------------------ Premiere may no longer be under threat by bankruptcy. At least, this appears to be the case at the moment, says KirchPayTV insolvency administrator Joseph F…hsl after Premiere CEO Georg Kofler presented his rescue plan for the loss-making pay-TV unit last Monday. "I got the impression that the banks felt they would be able to live with the plan," Mr. Fuchsl after emerging from the meeting. He did not provide further details. But a banking insider interviewed by Handelsblatt confirmed Mr. Fuchsl's observations: "Kofler is doing a good job. We will support a workable plan." The insider told the German daily that they are under the impression that Premiere would need less capital to bring it into profit than was previously thought. The plan presented to Bayerische Landesbank and its Austrian subsidiary Bawag, and HypoVereinsbank calls for a redundancy package that will affect 1,000 of the company's 2,400 jobs by the end of 2002. Mr. Kofler sees profit by 2005 at the latest. Mr. Fuchsl earlier said that the company needs a cash injection of "100 million euros plus X" in order to secure Premiere's survival until the end of this year. Insiders told Handelsblatt that it will still take a week before the banks will be in a position to decide whether they'll provide the funding. Meanwhile, this development signals that the banks are no longer interested in becoming shareholders of Premiere, a solution floated earlier. Sources say the banks' involvement would now be limited to providing interim financing, although they will be enlisted as adviser when the company begins search for investor proper in October. Of the broadcaster's total bank debts of EUR750 million, around EUR500 million is owed to Bayern LB and Bawag, and the remaining EUR250 million or so comes from HypoVereinsbank. Premiere, estimated to be losing EUR1.5 million a day, is largely blamed for the collapse of parent KirchPayTV and the KirchGruppe core unit, KirchMedia. SACHSENRING AG: No State Aid for Now as Firm Doesn't Need Any ------------------------------------------------------------- The German state of Saxony will not extend financial aid to insolvent auto parts maker Sachsenring Automobiltechnik AG, state finance minister Martin Gillo said recently. AFX News did not state the reason for this decision, but it indicated that the company doesn't need some form of state aid for now. Citing insolvency administrator Bruno Kuebler, the news agency said the company is not in a hurry to look for a buyer. "There are a whole lot of interested parties. [Sachsenring is looking for] a strategic partner, whose products are similar," Mr. Kuebler was quoted by the Financial Times Deutschland as saying recently. He said there are foreign as well as domestic companies that are interested in the company, but he did not name them except for Canadian automobile supplier Magna, which is in the running. At last Thursday's company meeting, ThyssenKrupp AG and ZF Friedrichshafen were also named as two potential interested parties, the paper said. The company employs 1,425 and is a supplier to major carmakers such as DaimlerChrysler AG and Volkswagen AG. It filed for insolvency protection on May 30. ============= I R E L A N D ============= AER LINGUS: Resumes Operations a Day Earlier as Pilots Relent ------------------------------------------------------------- Irish carrier Aer Lingus, which grounded planes Friday, returned to skies Tuesday, a day earlier than had been announced, said CNN, the cable news channel. According to the report, flights to the U.K. and the rest of Europe resumed at around 1200 GMT Tuesday, while transatlantic services were restored yesterday. The early resumption of services were made possible by a 91% acceptance by pilots late Monday of proposal handed by Ireland's Labor Court, to end the dispute over working conditions. Details of the court proposals were not immediately available. ========= I T A L Y ========= ALITALIA SPA: Corporate Headquarters Could Raise US$ 200MM ---------------------------------------------------------- Struggling national flag carrier Alitalia SpA could raise between US$185 million and US$200 million for its modern headquarters, known as Alcatraz in the outskirts of Rome, says Bloomberg. According to the news agency, the timing of the sale is perfect because of the rising prices of real estate in Italy. Companies selling assets this year are expected to get as much as EUR3.6 billion (US$3.4 billion) from real estate sales. The report notes that Italian property prices have risen in the past three years, after government brought down interest rates to qualify for the single European currency. Accordingly, residential prices went up 7.9% in 2001, while office prices gained 6.7%. Office rents in Milan, the financial district, rose 12% last year, the report says. Alitalia already has a list of five buyers for its head office and forecasts completion of the sale by end of July, Bloomberg says. The report did not identify these potential buyers. ===================== N E T H E R L A N D S ===================== KPNQWEST NV: Swedish Operations Follow Parent to Bankruptcy ----------------------------------------------------------- Unconfirmed reports have surfaced that the Swedish unit of KPNQwest NV filed for bankruptcy Tuesday, following the steps of the German and Belgian operations, reports Total Telecom. Citing a Reuters report, the industry paper also says the Finnish unit is planning to bolt from the group and run business separately. The Portuguese business, for its part, claims to be unaffected. According to some accounts, the Swedish subsidiary, which is one of KPNQwest's autonomous national operations, had considered a management buyout prior to its decision to declare bankruptcy. Meanwhile, management has yet to confirm that its interim administrator ordered the shutdown of the Belgian Network Operations in Hoeilaart Tuesday morning. According to Total Telecom, this particular asset is crucial to the company's European operations. Shutting down traffic abruptly would cut off a substantial part of Europe from the worldwide web community. It is understood that the company's network owns as much as 25% of Internet traffic in the continent. A spokesman told Total Telecom, however, that discussions with Belgian staff unions are ongoing, as were the formulation of network contingency plans for customers. He added that KPNQwest was doing everything it could to ensure the Belgian network stays up. KPN NV: Finalizes Sale of Network Builder to Koninklijke Volker --------------------------------------------------------------- Restructuring Dutch phone incumbent KPN Telecom NV confirmed Tuesday that it had inked a definitive agreement that will transfer its majority stake in its network construction unit to Koninklijke Volker Wessels Stevin NV for EUR13.75 million. Initially, the buyer will take a 55% in the company, but at the end of 2004, Volker Wessels Stevin will take the remaining 45%. The final price will depend on the unit's performance in 2003 and 2004, KPN said in a statement. Reuters says KPN had previously said it took a book loss of EUR63 milion in the first quarter on the sale. The unit develops, builds and operates telecoms structures. The sale is part of the company's strategy to sell non-core assets to reduce its outstanding debt. KPNQWEST NV: Could Be De-listed From Euronext Today --------------------------------------------------- Bankrupt Internet data carrier KPNQwest NV is going to be de- listed, possibly today, from the Euronext stock index, says BBC News. The company's shares collapsed Monday following its bankruptcy filing Friday. The news channel said the company's stocks shed at least 71% during Monday's trading, valuing the once high- flying blue chip just EUR5 million. This pales in comparison with its EUR42 billion market valuation just two years back. "What has happened is unbelievable," Philip Scholte, a telecoms analyst at Stroeve brokerage in Amsterdam, told BBC News. "It's difficult for me to accept that business has deteriorated this badly in only a couple of months," he said. In February, the company assured investors and clients that it had sufficient funds. In mid-May, the company said credit protection was not an option. But a week later, it sought a moratorium on payments, which was eventually upgraded to bankruptcy last Friday. Analysts say the company's network could fetch between EUR200 million and EUR250 million. LAURUS NV: Signing Second Tranche of Funding Agreements ------------------------------------------------------- Casino SA, Laurus NV and the Banks (ABN Amro Bank, ING Bank and Rabobank Nederland) signed, as announced on May 22, 2002, the second tranche of the transaction documentation. The remaining contracts with respect to the finance arrangements between Laurus and the Banks will be signed in the course of this week, Laurus NV announced in a statement Monday, June 3. It is expected that the Laurus meeting of shareholders will be held on Friday June 28, 2002. This meeting of shareholders will decide on inter alia the proposed transaction with Casino and the Banks and the Laurus 2001 annual accounts. An explanatory memorandum on the proposed transaction will be published, together with the 2001 annual accounts, 15 days prior to the shareholders meeting. =========== P O L A N D =========== ELEKTRIM SA: BRE Bank Announces EUR 100MM Restructured Bond-buy --------------------------------------------------------------- The Management Board of Elektrim S.A. announces that on June 2, 2002 it received a declaration from BRE Bank S.A. that it or its affiliate will purchase on the secondary market EUR 100 million of restructured bonds from bondholders of Elektrim Finance B.V. due 2004. The declaration of BRE Bank S.A. is of major significance for the completion of the agreement with bondholders, the details of which will be presented when all concerned parties sign the agreement. ELEKTRIM SA: Announces Shareholders' Meeting Schedule, Agenda ------------------------------------------------------------- The Management Board of Elektrim S.A. notifies all Shareholders the telecoms and power conglomerate will hold a Shareholders' Meeting June 28, 2002 at 10:00am in Warsaw at Panska 77/79 with the following agenda: 1. Points of order: a. opening of the General Meeting of Shareholders, b. election of the Meeting's chairperson, c. election of the Tellers Committee, d. approval of the Agenda. 2. Consideration of the Management Board's report on 2001 operations and the Company's financial statement for the year 2001. 3. Consideration of the consolidated financial statement of the Elektrim Group for the year 2001. 4. Consideration of the Supervisory Board's report on 2001 activities. 5. Consideration of resolutions on the following issues: a. approval of the Management Board's report on its operations in 2001 and the Company's annual financial statement for 2001, b. approval of the consolidated financial statement of the Elektrim Group for 2001, c. approval of the Supervisory Board's report for 2001, d. appropriation of profits for 2001, e. acknowledgement of the performance of duties in the year 2001 by the Management Board Members. f. acknowledgement of the performance of duties by the Supervisory Board Members in the year 2000. 6. Adoption of a resolution on the coverage of loss generated in previous years. 7. Adoption of a resolution on the appointment of a Committee to prepare and implement a plan of bonuses for the Company's Management and Supervisory Boards. 8. Adoption of a resolution on the increase in the Company's capital by the amount of PLN 4,200,000 through issuance of 4,200,000 ordinary bearer shares with the nominal value of PLN 1 per share with exemption of preemptive rights of existing shareholders. 9. Adoption of a resolution on amending 5 of the Company Statutes. 10.Closing of the Meeting. The Management Board of Elektrim S.A. announces that shareholders may take part in the Meeting in person or by proxy. Representatives of legal persons should present updated excerpts from relevant registers listing the persons authorized to represent those entities. The person who has not been listed in the excerpt should bear a proxy. Co-owners of shares shall indicate their joint representative to participate in the Meeting. The proxy authorizing to participate in the Meeting shall be in writing on pain of being invalid. The Management Board of Elektrim S.A. announces that the right to participate in the Meeting of Shareholders is granted on the basis of depository certificates provided that they have been deposited in the company's office in Warsaw at 77/79 Panska Street, 4th floor, room no 411, tel. no 432 87 15, 432 87 22 between 10.00 a.m. - 2.00 p.m. at least one week before the date of the Meeting, i.e. by June 21, 2002 (incl.), and are not withdrawn before the conclusion thereof. The Management Board of Elektrim S.A. announces that registration of attendance on June 28, 2002 will begin at 9:00 am. Pursuant to the requirement of 402 of the Commercial Companies Code, The Board presents the wording of the proposed amendment to the Company Statutes: Present wording of 5.1: " The Company's share capital is PLN 83,770,297 (say: eighty three million seven hundred seventy thousand two hundred and ninety seven) and is divided into 83,770,297 (say: eighty three million seven hundred seventy thousand two hundred and ninety seven) bearer shares with a nominal value of PLN 1 per share". Proposed wording of 5.1: " The Company's share capital is PLN 87,970,297 (say: eighty seven million nine hundred seventy thousand two hundred and ninety seven) and is divided into 87,970,297 (say: eighty seven million nine hundred seventy thousand two hundred and ninety seven) bearer shares with a nominal value of PLN 1 per share". ELEKTRIM SA: Initial Deal With Bondholders and BRE Bank S.A. ------------------------------------------------------------ The Management Board of Elektrim S.A. announces that on 4 June 2002, it executed an initial agreement with bondholders of Elektrim Finance's EUR 440 million Exchangeable Bonds due 2004 and with BRE Bank S.A. The bondholders were represented by a committee appointed by the bondholders of Exchangeable Bonds who hold approximately 50% of the aggregate face principal value of bonds. The agreement provides for a comprehensive restructuring of bonds. The above agreement replaces the previous initial agreement executed between Elektrim S.A. and representatives of Bondholders on May 10, 2002. The new agreement includes a declaration of intent from BRE Bank S.A. that it or its affiliates will purchase, on the secondary market, EUR 100 million of restructured Bonds from Elektrim Finance's Bondholders with the original face value of approximately EUR 89.9 million. The structure providing for the purchase of Bonds, which replaces the previously contemplated variant of a credit to be extended to Elektrim S.A. by BRE Bank S.A., simplifies to a great extent the process of preparing the final documentation and provides for a uniform character of security for Elektrim's Bondholders. The initial agreement provides for the following major terms of the Bonds' restructuring: - EUR 100 million is to be applied by Elektrim S.A. to repay current interest and to redeem part of the restructured bonds, - Another instalment in the amount of Euro 100 million will be due on December 15, 2002. - The remaining restructured Bonds will be redeemed with the proceeds from the sale of Elektrim's assets. If funds are sourced, Elektrim S.A. will have the right to redeem the Bonds at any time, upon 30 days notice. - The cash coupon accrued as at June 15, 2002 will be at a rate of 7% p.a. The cash coupon for the remainder of the issue will be 3.75% p.a. payable semi-annually. - The price of Bonds redeemed with the initial payment will be at 111.3% as provided for in the existing terms and conditions of Exchangeable Bonds for that date. Thereafter, the redemption price will accrete at 11.25% per annum until June 15, 2003, next, at the rate of 13.75% for the period from June 15, 2003 to 15 December 2003, and for the period from December 15, 2003 - at the rate of 15.5%, if security is established on the stake held by Elektrim S.A. in PAK S.A. or at 16.25%, if such security is not established. - The restructured Bonds will be secured with Elektrim's stake in Elektrim Telekomunikacja and certain other assets. The pledge will be released as the bonds are redeemed. However, the pledge on the shares of Elektrim Telekomunikacja Sp. z o.o. will only be released following a full redemption of restructured bonds. - Final maturity of the bonds will be June 30, 2004. - The agreement does not provide for the possibility of converting Restructured Bonds into shares of Elektrim S.A.; - The initial payment will be sourced from the Company's existing funds. If sufficient dispositions are not completed this year, Euro100 million mandatory redemption in December 2002 is proposed to be financed through an additional indebtedness. The agreement is governed by English law and becomes effective upon final approval of the meeting of bondholders and preparation of legal documentation. The parties agree that the agreement includes all first principles of the Bonds' restructuring and its execution should follow without delay. ========= S P A I N ========= CAMPOFRIO ALIMENTACION: Backpedals on Latin American Investments ---------------------------------------------------------------- Heavily indebted Spanish food company Campofrio Alimentacion SA is retreating from the American continent, particularly in Latin America, and will instead focus in Europe where it has a large market share, says Dow Jones Newswires. The news agency says the company is peddling two holdings, one in Argentina and the other based in the Dominican Republic. Campo Austral, the Argentinean food processor owned by Campofrio and Blasfo, posted losses of EUR14.9 million last year, three times the losses in 2000. The Spanish parent is now looking for buyers of its 40% stake. Also up for sale is the 49% stake in meat company Agrocarne SA, the subsidiary in the Dominican Republic, says Dow Jones Newswires. "These markets, which in their day were very attractive and strategic, are no longer such for the company," a Campofrio spokesman told the newswire in an e-mail. "The intention of Campofrio is to consolidate its position in Europe, and focus on this market, optimizing the resources that are there," the spokesman said. The 50-year-old Campofrio has a presence in Poland, Romania, and Russia, as well as France and Portugal, says the newswire. Its non-Iberian operations accounted for around 23% of sales in 2001, with the eastern European countries accounting for 17.3% of 2001 sales. In Spain, the company has a market share of around 20%. The company reported net profit of EUR25.7 million in 2001, with provisions of EUR40 million for Argentina and any losses arising from disposals in the Americas, the report says. "It's easier to create a brand name in Russia, which has a growing market, than somewhere like the U.S. which already has known brands," Banesto Bolsa analyst Javier Mata told Dow Jones Newswires in an interview recently. Campofrio forecasts group annual sales growth rates in the single digits over the next four years. This, however, is unimpressive, according to analysts interviewed by the newswire. They believe the company's financial structure remains weak, despite the recent capital hikes. Part of the problem is its debt level, whose debt-to-equity ratio stands at 78%, according to Morgan Stanley analysts. They note that this ratio could rise to 102% in 2002 if balance sheet debt is added. The company completed a EUR100 million capital increase in May and had earlier reached an agreement with a group of banks for a EUR300 million syndicated loan to replace another similar loan obtained in 2000, says the newswire. =========== S W E D E N =========== LM ERICSSON: Provides Fiber Optics Network Equipment to KPN ----------------------------------------------------------- KPN Telecom and Ericsson have signed a contract on Tuesday, May 28, in which Ericsson -- http://www.ericsson.com/-- becomes the supplier of the Ethernet equipment for the Fiber to the Home (FttH) pilots of KPN Telecom. With this, KPN Telecom is ready to start with the Fiber to the Home Pilots (FttH) already this year, in which very fast broadband Internet will be delivered to consumers via a fiber optics network. Ericsson is the supplier of the network equipment. The contract between KPN Telecom and Ericsson includes the delivery of Ethernet equipment in the access network of KPN Telecom and the equipment at the end-users home. Ericsson's technology enables KPN to deliver a safe broadband connection with a guaranteed speed to the customers. The Ericsson equipment is not only future proof, it is also scaleable. Initially a speed of 10Mb/s will be delivered, in a later stage also broadband connections of 100Mb/s or even 1 Gb/s will be delivered to the consumer. In this way future proof connections for the consumer will be realized, with access to among others High-speed Internet, video services, local user services, gaming and telephony. Fiber to the Home is the broadband technology for the mass market of the distant future. FttH enables the simultaneous transportation of several services, such as very fast Internet, telephony and television, via one optic fiber. With FttH the access network will be based on fiber and is able to deliver a speed of 10Mb/s, 100 Mb/s and even 1 Gb/s. This creates an access network with nearly unrestricted possibilities. This technology supports a complete open model in which consumers get all freedom to choose their service supplier. KPN is a telecommunications company offering a wide range of high quality and innovative telecommunications services for both the private and business market. Its core business activities are mobile communications; fixed network and Internet services and IP/Data services. KPN focuses notably on the Benelux-countries and Germany and services over 25 million customers. KPN Mobile N.V. is an 85%-owned subsidiary of Royal KPN N.V. NTT DoCoMo Inc., KPN's strategic partner, owns the remaining 15%. KPN Mobile is currently active with its own network operators in Germany (E-Plus), the Netherlands and Belgium (BASE), where more than 8,000 employees serve some 13.7 million customers as of end December 2001. For further information, please contact: Caroline Uliana, Press Officer Ericsson Corporate Communications Telephone: +46 8 719 6045 Email: caroline.uliana@lme.ericsson.se LM ERICSSON: To Test UMTS Network in Dallas With AT&T Wireless -------------------------------------------------------------- AT&T Wireless Services, Inc. and Ericsson will continue to deliver their commitment to bring true 3G capabilities to the United States by deploying a UMTS/WCDMA market trial system in the fourth quarter of 2002. This UMTS/WCDMA market trial system, which will have about 100 cell sites in the Dallas area, will be the first 1900 MHz UMTS/WCDMA system in the Americas. In February, AT&T Wireless and Ericsson completed the first live 3G UMTS voice call in the United States at AT&T Wireless' headquarters in Redmond, Wash. The two companies continued the momentum towards UMTS/WCDMA with a recent lab demonstration in which multimedia files were transferred simultaneously at packet data speeds exceeding 300 Kbps. Applications and capability development and verification will continue throughout the summer as a prelude to the launch of the trial network. "UMTS/WCDMA is the most prominent wireless telecommunications technology available, and we are proud to be at the forefront of the United States industry in bringing it to market," said Rod Nelson, chief technology officer for AT&T Wireless. "This demonstration is an opportunity for Ericsson and AT&T Wireless to advance the development of UMTS/WCDMA in the 1900 MHz frequencies," said Greg Slemons, executive vice president network services for AT&T Wireless. "It will demonstrate the advanced services and capabilities of UMTS/WCDMA, and develop best practices for the commercial deployments that will follow." "It's extremely rewarding to see the fruits of our longstanding partnership and common vision between AT&T Wireless and Ericsson," Ericsson Inc. President and Chief Executive Officer Angel Ruiz said. "The fact that WCDMA at 1900 MHz is now entering the American continent confirms that WCDMA will become a major global standard with systems operational in all world markets." For further information, please contact: Kathy Egan Ericsson Inc. Corporate Communications Telephone: +1-212-685-4030 Email: pressrelations@ericsson.com Glenn Sapadin Ericsson Inc. Investor Relations Telephone: +1-212-685-4030 Email: glenn.sapadin@ericsson.com Ritch Blasi AT&T Wireless Telephone: +1-908-696-4242 Wireless +1-908-612-1760 Email: ritch.blasi@attws.com LM ERICSSON: Chief Discredits Forecasts of Market Recovery in '02 ----------------------------------------------------------------- Kurt Hellstrom, the chief executive of Ericsson, believes the industry downturn will not be reversed this year, contradicting recent forecasts made by rivals and a number of analysts. In an interview with the Financial Times, Mr. Hellstrom said an upturn beginning next year is even doubtful. But he said the company is confident it will be able to return to profit "some time next year." "We don't think the market has become worse but the downturn has been prolonged. We have to face the possibility that next year doesn't turn upwards," he told the Financial Times. But despite the slump, Mr. Hellstrom said it is imperative that telecom operators start investing on their networks anew because "the quality of networks is degenerating almost everywhere, and particularly in western Europe." The Ericsson chief was expected yesterday to ask shareholders to approve the planned SEK30 billion secondary equity offering that is equivalent to about 18% of its current market value. Mr. Hellstrom told the paper that the issue is key to seeing the company through the downturn. He said proceeds of the rights issue will be used to strengthen the company's balance sheet and ensure enough working capital until market conditions improved. "This is not about covering black holes. We will cover any losses from savings and cost-cutting," he told the Financial Times. Ericsson shares fell 4% to SEK20.8 on Tuesday after a profits warning from Singapore's Flextronics, an outsourcing specialist involved in the production of many of SonyEricsson's handsets. The shares are more than 90% below their SEK230 peak in March 2000, says the paper. =========================== U N I T E D K I N G D O M =========================== ASTON GROUP: Winds up Livingston Office in Scotland --------------------------------------------------- The Management Board of Aston Group has filed to liquidate Aston Quorum, its Scottish office in Livingston, a company statement revealed Friday. Recent accounting records in the unit revealed poor business results. The move follows after the group's Management Board decided that a potential for a turnaround in the group's subsidiary is unlikely. Aston will seek to help customers with unfinished projects. Aston's U.K. market will be serviced from Aston's office in London. The U.K. market is an indispensable part of Aston's global business to enter the international industry towards multi-location or multi-national, mid-sized customers. Claus Hansen, Aston Group A/S's Executive Vice President regrettably informed that due to the unit's liquidation, 35 employees will be laid off. Aston Quorum, with turnover of GBP4 million, provides IT software system integration and consultancy services. The group maintains business software and also provides supply chain management solutions for U.K. and Ireland-based firms. The unit has appointed Gary Fraser and Blair Nimmo, head of KPMG corporate recovery in Scotland, as receivers. The rest of the group's staff will stay with the company, while Fraser and Nimmo will be seeking buyers for the firm. Nimmo added that the collapse of the subsidiary was due to the withdrawal of financial support from the Aston Quorum's parent company and, more generally, due to the difficult trading conditions across the software industry. Further information may be obtained by contacting: Claus Hansen Executive Vice President Aston Group A/S Telephone: (+45) 33 28 16 90 BRITISH TELECOM: Wants New Directory Business After Selling Yell ---------------------------------------------------------------- British Telecom, which sold Yell in June last year, is reportedly planning to launch a new classified ads and directory business to compete with the erstwhile subsidiary, says Reuters. The report says an announcement is expected next month to coincide with the start of Yell's trading in the London stock exchange. Accordingly, the prohibition against British Telecom, which bars it to indulge in the business following the sale of Yell, will expire in a few months' time. Citing a Sunday Telegraph report, Reuters says the telecom giant is exploring a partnership with either Thomson or Scoot.com, both rivals of Yell's Yellow Pages. The plan, however, is not dependent on any deal with the two companies. Private equity investors Apax and Hicks Muse Tate & Furst paid GBP2.1 billion (US$3.07 billion) for Yell. They plan to raise GBP750 million from the listing, considered to be one of Europe's biggest flotations of the year. ELKSTONE HOLDINGS: PwC Offer Manufacturing Company for Sale ----------------------------------------------------------- The Joint Administrative Receivers, Stuart Maddison and Bob Bailey of PricewaterhouseCoopers, offer for sale the business and assets of Elkstone Holdings Limited, currently under administrative receivership. The Derbyshire based group of companies manufacture Caravan Soft Furnishings, Curtains, Upholstery and Bedding. Principal features of the business include: Manor House Furnishings - Turnover GBP27 million (circa) - Market leader - EBITDA GBP2.6 million in ten months to February 2002 - Skilled workforce - Blue chip customer base - Profitable track record Tudor House Textiles Ltd - Turnover GBP 5 million (circa) - Good growth prospects - EBITDA GBP763,000 in ten months to February 2002 - Loyal and skilled workforce - Broad customer base - Modern leasehold premises Beauvale Furnishings - Turnover GBP12 million (circa) - Blue chip customer base - Skilled workforce - Leasehold and freehold premises For further information, please contact: Jonathan Harris/Ami Coulson PricewaterhouseCoopers Victoria House 76 Milton Street Nottingham NG1 3QY Telephone: 0115 947 3000 Fax: 0115 947 5225 Email: jonathan.j.harris@uk.pwcglobal.com ENERGIS PLC: Eurostar Renews Networking Contract ------------------------------------------------ Energis plc -- www.energis.co.uk -- announced that Eurostar, the high-speed passenger train operator from London to Paris and Brussels, has renewed Energis' contract to supply the network infrastructure for all communications between its UK sites for another three years. In 1996 Eurostar was Energis' first customer for a wide area networking (WAN) solution to connect its 14 UK sites into a single, managed network. It includes all Eurostar's sales distribution systems including its award-winning sales call centre in Ashford, Kent, the reservation system and specialised ticketing systems. Since it began operations in 1994, Eurostar has carried more than 40 million passengers between London, Paris and Brussels. With more than 64% market share on the London-Paris route and 46% on the London-Brussels route, Eurostar sees Energis' technology as crucial to underpinning its growing success. Rob McLeod, Managing Director of Corporate Solutions at Energis, said: "Energis has a long history of working with Eurostar and developing customised solutions to support its business needs. We are proud to be working with Eurostar as their service expands." Dave Jamieson, Data Communications Manager at Eurostar said "Choosing Energis was straightforward - we know and like their solution because it is reliable and we've been impressed by their willingness to deliver whatever we need to run a reliable service for our customers." Energis is a leading UK telecommunications, internet and e- business solutions provider. It is focused on the business marketplace offering a portfolio of data, voice, call center, connectivity, complex managed hosting and managed application services. Energis hosts more than 25,000 commercial websites and around 1 billion call minutes a week are routed over the Energis network. For further information, please contact: Marta Judge Telephone: 020 7206 5800 Email: marta.judge@energis.com ESPORTA: Has Been Padding Revenues for Years, Says Paper -------------------------------------------------------- Some of the 700 self-employed coaches retained by troubled health club operator Esporta are seeking hundreds of pounds in reimbursement for taxes paid as a result of bogus accounting. The demand implies that the company has inflated its revenues by millions of pounds a year, says the Telegraph. Instructors claim the accounting procedure adopted by the company has denied them their right to VAT exemptions. According to the paper, the company's current revenue accounting is deceptive because it passes as its own earnings payments made by Esporta members for the coaches and the use of facilities. Of these payments, the company retains an average of 40%, which is supposed to be the only portion recorded as earnings. Self-employed coaches, on the other hand, are griping that the present set-up does not allow them to enjoy exemptions from paying VAT. Since their wards' payments still pass through Esportam, they are subject to 17.5% tax, which means that a GBP20 lesson would just be worth GBP17. A more common practice, which avoids VAT, is to allow members to pay instructors directly. The instructors then pay the club a fee for using the facilities, Telegraph says. In an interview with the Telegraph, Finance Director insisted that revenues were "correctly stated." He, however, conceded that "the reported turnover will be higher" than if members paid instructors directly. He assured that contracts with instructors will be changed to allow them to benefit from VAT exemption. "Our preferred method of operating going forward is for the self- employed instructor to charge members at classes and then pass on a payment to Esporta," Mr. Ball told the Telegraph. Mr. Ball clarified, though, that not all of the 700 self-employed coaches are paid through the clubs, but he declined to state their proportion. By its own estimates, the Telegraph says Esporta could boost its revenues by GBP5.25 million if 350 instructors are paid through their club. Mr. Ball did not discredit the estimate but said his "gut feel" is that those affected number fewer than 100. Even so, extra revenues will total about GBP1.5 million, the paper says. The company is currently facing a hostile 80p-a-share bid from venture capitalists Duke Street. Observers believe the company is just holding out for a higher offer and its previous accounting revenues is giving it a much better profile in the City. PRESCOT ALUMINIUM: Administrators Offer Cable Business for Sale --------------------------------------------------------------- John Whitfield and Gerald Smith, the joint administrators of Prescot Aluminium Company Limited, offer for sale the business and assets of the cable manufacturing group. Main features of the business includes: - UK's only conductor cable manufacturing business - Turnover of approximately o12m - Blue chip customer base with healthy order book - Dedicated engineering workforce of 69 - Modern leassehold premises in Knowsley For further information, please contact: Kerry Stewart RSM Robson Rhodes Centre City Tower 7 Hill Street Birmingham B5 4UU Telephone: 0121 697 6000 Fax: 0121 697 6112 TELESENSKSCL: Jobs in Scotland at Risk as Parent Runs Out of Cash ----------------------------------------------------------------- Hundreds of hi-tech jobs in Telesens-KSCL Edinburgh, Scotland are under threat after German-based parent of software firm announced that it was running out of cash. The funding crisis at Telesens-KSCL came after the Scottish subsidiary of the group was refused permission by its bankers, Royal Bank of Scotland and Bank of Scotland, to transfer funds to its ailing parent in Germany. Under German securities laws, the report said, a business has three weeks to find the means to avoid filing a formal insolvency petition. Bank of Scotland and Royal Bank of Scotland both declined to comment, citing client confidentiality. According to the Scotsman Wednesday, the company which employs 350 people in Scotland alone, has almost half of its operations based in Edinburgh. More than 80% of the German group's revenue comes from the company's Edinburgh subsidiary. Previously, KSCL was was sold to Telesens in the end of 2000 for GBP129 million. KSCL, before the takeover by its German rival, was known as one of Scotland's largest software firms with plans to employ up to 1,000 more staff to expand. According to the Scotsman, about 19 million clients in over 30 countries receive their phone bills from the group's billing administration and customer care system. The Edinburgh firm's last financial results saw GBP5.3 million in profits. However, since the dramatic slump in the telecoms industry, the company's fortunes have gone into freefall. The Edinburgh-based division, which also owns offices in Paris and Hong Kong, has already axed about 100 jobs during the past year to cut cost. Alan Marston, a director of TelesensKSCL in Edinburgh, expects the company's Scottish operations would be snapped up upon the collapse of its German parent firm. He adds that the company is already in negotiations with several large companies regarding a possible sale of the group's Edinburugh unit. With the subsidiary's client base and revenue, there is a good chance for the business to be acquired quickly, thus, saving more jobs. TELEWEST COMMUNICATIONS: Admits to Receipt of Letter From Lawyers ----------------------------------------------------------------- Telewest Communications Plc finally confirmed receipt of a letter sent by bondholders seeking an audience with management to discuss the company's debt plan, says the Telegraph. A spokeswoman did not reveal details of the letter other than the request for a meeting, says the report. "We have received a letter from lawyers acting on behalf of bondholders. At this point we have asked for verification of who they actually represent, but of course we are willing to listen to our investors. We will not go into details of what was in that letter, but it was asking for a meeting," the unnamed executive said. She said the letter came with a letterhead belonging to the law firm Cadwalader Wickersham & Taft, which is known to specialize in insolvency. Troubled Company Reporter-Europe said Tuesday that bondholders intends to pressure management to hasten its plan to restructure the cable group's GBP6 billion debt. It added that aside from the law firm, UBS Warburg was also hired as adviser. The form of restructuring that the group is backing is yet unknown, TCR-Europe said. But if it's any indication, these advisers are the same people behind the debt-for-equity swap to be undertaken in rival cable group NTL Incorporated. The company has GBP4 billion worth of bonds. Hobbled by concerns regarding its ability to service debts, the company's stocks have fallen from a high of 563p during the tech boom, to just 5p at present. The group's most imminent obligation is a debt repayment for a GBP293 million convertible bond due to Deutsche Telekom in late 2003. The company is currently valued at GBP143 million. Last month Telewest announced it was cutting 1,500 jobs in a bid to save up to GBP50 million a year. The company is rumored to be selling assets such as Flextech, its TV content arm. Another option could be a rescue deal from Liberty Media, the company headed by U.S. cable tycoon John Malone, which has a 25% stake in the company. ************ S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam, Larri-Nil Veloso and Maria Lourdes Reyes, Editors. Copyright 2001. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *